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Date : Apr 05, 2016
Industrial Outlook Survey - Q4:2015-16 (Round 73)

The Industrial Outlook Survey conducted during January-March 2016 (Round 731), provides qualitative assessment of business situation of companies in the Indian manufacturing sector for Q4:2015-16 and their expectations for the ensuing quarter Q1:2016-17. The survey elicited response from 1,342 manufacturing companies.

Highlights:

Summary Table: Net response2 (NR in %) comparison over previous quarter
Parameters Assessment period Expectation period
Q3:2015-16 Q4:2015-16 Q4:2015-16 Q1:2016-17
Production 16.0 16.8 31.1 25.0
Order Books 11.5 12.1 29.1 21.2
Pending Orders 14.3 13.9 6.3 10.2
Capacity Utilisation 7.1 7.1 19.1 13.4
Exports 5.7 3.3 16.9 13.7
Imports 6.1 4.7 7.7 5.8
Employment 5.8 4.1 8.6 7.1
Financial Situation 13.2 14.3 24.7 24.8
Availability of Finance 12.9 12.4 20.0 19.5
Cost of Finance -5.4 -8.7 -5.5 -8.3
Cost of Raw Material -26.4 -24.4 -27.3 -27.7
Selling Price -1.4 -3.7 7.2 7.1
Profit Margin -15.3 -16.7 -2.0 -3.6
Overall Business Situation 17.4 16.2 33.3 30.5
Salary 25.1 27.5 22.1 30.3
Business Expectation Index3 103.6 103.0 114.2 110.9

Assessment Quarter (Q4:2015-16)

  • Survey indicated moderate increase in optimism for production, order books, financial situation and salary for Q4:2015-16 as compared with Q3:2015-16. However sentiments on other indicators, vis. exports, imports, employments, profit margin and overall business situation deteriorated.

  • As a result, the business sentiments of the Indian manufacturing sector, as inferred from the Business Expectation Index (BEI), witnessed slight moderation.

Expectation Quarter (Q1:2016-17)

  • The outlook on business sentiments shows moderate optimism for Q1:2016-17. The BEI dipped from 114.2 (for Q4:2015-16) to 110.9 (for Q1:2016-17).

  • Moderation in the business sentiments is seen in all business indicators barring pending orders, salary and overall financial situation.


Table 1: Assessment & Expectation for Production
(Percentage responses)@
Quarter Total response Assessment Expectation
Increase Decrease No change Net response# Increase Decrease No change Net response
Q4:2014-15 1565 37.2 15.5 47.3 21.7 42.6 10.3 47.0 32.3
Q1:2015-16 1299 34.1 17.8 48.1 16.3 39.6 10.9 49.5 28.7
Q2:2015-16 1304 34.1 18.9 46.9 15.2 40.3 11.4 48.3 28.9
Q3:2015-16 1337 34.2 18.2 47.6 16.0 40.5 11.3 48.2 29.2
Q4:2015-16 1342 35.6 18.8 45.6 16.8 41.2 10.2 48.6 31.1
Q1:2016-17           38.8 13.8 47.4 25.0
‘Increase’ in production is optimistic.
@:Due to rounding off percentage may not add up to 100. This is applicable for all the tables from 1 to 17.
#: Net Response (NR) is the difference of percentage of the respondents reporting optimism and that reporting pessimism. The range is -100 to 100. Any value greater than zero indicates expansion and any value less than zero indicates contraction.

Table 2: Assessment & Expectation for Order Books
(Percentage responses)
Quarter Total response Assessment Expectation
Increase Decrease No change Net response Increase Decrease No change Net response
Q4:2014-15 1565 32.3 16.0 51.7 16.3 38.6 9.8 51.6 28.7
Q1:2015-16 1299 30.8 17.7 51.5 13.2 37.8 10.5 51.7 27.3
Q2:2015-16 1304 31.1 19.7 49.3 11.4 37.4 11.6 51.0 25.8
Q3:2015-16 1337 30.4 18.8 50.8 11.5 37.4 11.9 50.8 25.5
Q4:2015-16 1342 31.8 19.7 48.5 12.1 39.7 10.6 49.8 29.1
Q1:2016-17           35.5 14.3 50.3 21.2
‘Increase’ in order books is optimistic.

Table 3: Assessment & Expectation for Pending Orders
(Percentage responses)
Quarter Total response Assessment Expectation
Below Normal Above Normal Normal Net response Below Normal Above Normal Normal Net response
Q4:2014-15 1565 17.7 6.9 75.3 10.8 12.4 5.3 82.4 7.1
Q1:2015-16 1299 18.6 5.1 76.3 13.6 13.1 6.9 80.1 6.2
Q2:2015-16 1304 18.6 5.1 76.3 13.5 14.6 6.1 79.4 8.5
Q3:2015-16 1337 19.2 5.0 75.8 14.3 14.1 6.5 79.4 7.6
Q4:2015-16 1342 18.2 4.3 77.4 13.9 13.3 7.0 79.7 6.3
Q1:2016-17           15.1 4.9 80.0 10.2
Pending orders ‘Below Normal’ is optimistic.

Table 4: Assessment & Expectation for Capacity Utilisation
(Percentage responses)
Indicator Options Assessment Expectation
Q4:2014-15 Q1:2015-16 Q2:2015-16 Q3:2015-16 Q4:2015-16 Q1:2015-16 Q2:2015-16 Q3:2015-16 Q4:2015-16 Q1:2016-17
Capacity Utilisation (CU)-(main product) Increase 23.5 23.3 21.7 23.4 24.6 27.5 27.7 27.8 27.8 26.3
No Change 61.2 60.0 60.2 60.4 57.9 63.7 62.1 62.0 63.5 60.8
Decrease 15.3 16.7 18.1 16.3 17.5 8.8 10.2 10.2 8.7 12.9
Net Response 8.2 6.7 3.6 7.1 7.1 18.7 17.6 17.5 19.1 13.4
Level of CU (compared to the average in last 4 quarters) Above normal 10.6 10.2 8.8 8.7 9.8 12.1 10.5 9.2 9.4 9.8
Normal 70.6 71.3 71.9 72.6 71.0 75.6 75.5 77.6 78.2 75.6
Below Normal 18.9 18.6 19.3 18.6 19.2 12.3 13.9 13.1 12.4 14.6
Net Response -8.3 -8.4 -10.5 -9.9 -9.4 -0.2 -3.4 -3.9 -3.0 -4.8
Assessment of Prod. Capacity (with regard to expected demand in next 6 months) More than adequate 14.7 15.1 14.1 14.3 13.9 13.9 15.8 14.4 14.5 13.8
Adequate 76.9 76.9 78.3 77.2 77.7 79.2 77.5 78.8 78.5 79.1
Less than adequate 8.5 8.0 7.7 8.5 8.5 6.9 6.8 6.8 7.0 7.1
Net Response 6.2 7.2 6.4 5.8 5.4 7.0 9.0 7.5 7.5 6.7
‘Increase’ in capacity utilisation is optimistic.

Table 5: Assessment & Expectation for Exports
(Percentage responses)
Quarter Total response Assessment Expectation
Increase Decrease No change Net response Increase Decrease No change Net response
Q4:2014-15 1565 23.9 13.8 62.3 10.1 29.3 8.3 62.4 21.1
Q1:2015-16 1299 24.1 14.0 62.0 10.1 27.6 8.1 64.3 19.5
Q2:2015-16 1304 23.5 17.8 58.7 5.7 27.5 8.0 64.5 19.6
Q3:2015-16 1337 23.3 17.7 59.0 5.7 27.3 10.6 62.1 16.7
Q4:2015-16 1342 22.1 18.8 59.1 3.3 26.9 10.0 63.1 16.9
Q1:2016-17           25.7 12.0 62.3 13.7
‘Increase’ in exports is optimistic.

Table 6: Assessment & Expectation for Imports
(Percentage responses)
Quarter Total response Assessment Expectation
Increase Decrease No change Net response Increase Decrease No change Net response
Q4:2014-15 1565 19.4 10.0 70.6 9.4 20.5 7.4 72.1 13.1
Q1:2015-16 1299 19.8 9.1 71.0 10.7 20.3 7.9 71.8 12.4
Q2:2015-16 1304 18.8 10.4 70.7 8.4 18.0 8.1 73.9 9.9
Q3:2015-16 1337 17.2 11.1 71.8 6.1 18.0 8.8 73.2 9.2
Q4:2015-16 1342 17.6 12.9 69.4 4.7 16.4 8.6 75.0 7.7
Q1:2016-17           16.7 10.9 72.4 5.8
‘Increase’ in imports is optimistic.

Table 7: Assessment & Expectations for level of Inventory (Raw Material and Finished Goods)
(Percentage responses)
Indicator Options Assessment Expectation
Q4:20 14-15 Q1:20 15-16 Q2:20 15-16 Q3:20 15-16 Q4:20 15-16 Q1:20 15-16 Q2:20 15-16 Q3:20 15-16 Q4:20 15-16 Q1:20 16-17
Inventory of raw material Below average 8.4 6.5 7.4 6.5 7.0 7.1 5.5 5.5 5.3 5.9
Average 77.5 79.3 78.9 81.4 80.5 83.0 83.0 83.9 84.8 84.4
Above average 14.1 14.2 13.7 12.2 12.5 10.0 11.5 10.6 9.9 9.7
Net Response -5.7 -7.7 -6.3 -5.7 -5.5 -2.9 -6.0 -5.1 -4.7 -3.8
Inventory of finished goods Below average 8.1 7.2 6.9 7.0 8.7 5.8 6.4 6.3 6.2 7.0
Average 73.8 74.7 75.6 75.7 75.9 80.9 78.9 82.1 81.6 81.9
Above average 18.2 18.1 17.5 17.4 15.4 13.4 14.6 11.6 12.1 11.1
Net Response -10.1 -10.9 -10.6 -10.4 -6.7 -7.6 -8.2 -5.3 -5.9 -4.1
Inventory of raw material and finished goods ‘Below average’ is optimistic.

Table 8: Assessment & Expectations for Employment Outlook
(Percentage responses)
Quarter Total response Assessment Expectation
Increase Decrease No change Net response Increase Decrease No change Net response
Q4:2014-15 1565 17.0 8.6 74.4 8.4 15.6 6.7 77.7 9.0
Q1:2015-16 1299 16.7 9.3 74.0 7.4 15.8 7.0 77.2 8.8
Q2:2015-16 1304 15.2 9.3 75.5 5.9 16.5 6.6 76.8 9.9
Q3:2015-16 1337 15.3 9.4 75.3 5.8 15.7 6.1 78.2 9.6
Q4:2015-16 1342 14.2 10.1 75.7 4.1 15.3 6.7 78.0 8.6
Q1:2016-17           15.1 8.0 76.9 7.1
‘Increase’ in employment is optimistic.

Table 9: Assessment & Expectation for Overall Financial Situation
(Percentage responses)
Quarter Total response Assessment Expectation
Better Worsen No change Net response Better Worsen No change Net response
Q4:2014-15 1565 27.9 13.0 59.2 14.9 34.6 8.2 57.2 26.4
Q1:2015-16 1299 27.9 13.2 59.1 14.4 34.3 8.0 57.7 26.3
Q2:2015-16 1304 27.5 14.0 58.6 13.5 34.2 9.1 56.7 25.1
Q3:2015-16 1337 26.2 12.9 60.9 13.2 34.8 8.8 56.4 26.0
Q4:2015-16 1342 26.6 12.3 61 14.3 33.3 8.5 58.2 24.7
Q1:2016-17           33.1 8.3 58.6 24.8
‘Better’ overall financial situation is optimistic.

Table 10: Assessment & Expectation for Working Capital Finance Requirement
(Percentage responses)
Quarter Total response Assessment Expectation
Increase Decrease No change Net response Increase Decrease No change Net response
Q4:2014-15 1565 34.2 6.6 59.2 27.6 32.9 5.0 62.1 27.9
Q1:2015-16 1299 30.2 6.8 63.0 23.5 32.3 5.1 62.6 27.2
Q2:2015-16 1304 30.2 6.0 63.8 24.2 29.6 4.7 65.7 25.0
Q3:2015-16 1337 30.3 6.7 62.9 23.6 29.9 4.3 65.8 25.5
Q4:2015-16 1342 31.7 6.8 61.4 24.9 30.1 4.9 65.0 25.2
Q1:2016-17           30.0 5.4 64.6 24.6
‘Increase’ in working capital finance is optimistic.

Table 11: Assessment & Expectation for Availability of Finance
(Percentage responses)
Indicator Options Assessment Expectation
Q4:2014-15 Q1:2015-16 Q2:2015-16 Q3:2015-16 Q4:2015-16 Q1:2015-16 Q2:2015-16 Q3:2015-16 Q4:2015-16 Q1:2016-17
Availability of finance (from internal accruals) Improve 22.9 21.5 21.1 22.3 21.7 24.7 23.9 23.5 26.1 25.6
No Change 66.8 68.3 68.1 68.3 69.0 68.8 68.9 69.8 67.8 68.3
Worsen 10.3 10.1 10.8 9.4 9.3 6.6 7.2 6.7 6.1 6.1
Net Response 12.6 11.4 10.4 12.9 12.4 18.1 16.7 16.8 20.0 19.5
Availability of Finance (from banks & other sources) Improve 20.3 19.1 19.3 19.2 18.3 22.6 21.2 20.0 20.6 21.6
No Change 72.8 75.6 75.0 74.4 74.2 72.4 75.0 76.3 74.7 73.2
Worsen 6.9 5.4 5.7 6.3 7.5 4.9 3.8 3.8 4.7 5.2
Net Response 13.4 13.7 13.6 12.9 10.8 17.7 17.3 16.2 16.0 16.4
Availability of Finance (from overseas, if applicable) Improve 15.0 13.0 11.1 11.3 8.8 14.4 12.9 11.5 12.1 10.0
No Change 79.4 82.2 83.9 83.5 85.3 81.6 83.6 85.0 84.1 85.4
Worsen 5.6 4.8 5.0 5.2 5.9 4.0 3.5 3.5 3.9 4.7
Net Response 9.4 8.2 6.1 6.2 2.9 10.4 9.3 8.0 8.2 5.3
‘Improvement’ in availability of finance is optimistic.

Table 12: Assessment & Expectation for Cost of Finance
(Percentage responses)
Quarter Total response Assessment Expectation
Decrease Increase No change Net response Decrease Increase No change Net response
Q4:2014-15 1565 7.4 25.1 67.5 -17.7 7.4 21.8 70.8 -14.4
Q1:2015-16 1299 10.2 22.3 67.5 -12.1 8.8 21.8 69.4 -13.0
Q2:2015-16 1304 9.4 20.8 69.7 -11.4 9.9 18.7 71.4 -8.7
Q3:2015-16 1337 14.0 19.4 66.6 -5.4 10.2 17.9 71.9 -7.6
Q4:2015-16 1342 11.0 19.7 69.2 -8.7 10.5 15.9 73.6 -5.5
Q1:2016-17           8.8 17.1 74.1 -8.3
Decrease’ in cost of finance is optimistic.

Table 13: Assessment & Expectation for Cost of Raw Material
(Percentage responses)
Quarter Total response Assessment Expectation
Decrease Increase No change Net response Decrease Increase No change Net response
Q4:2014-15 1565 9.6 42.4 48.0 -32.8 4.9 41.2 53.9 -36.3
Q1:2015-16 1299 8.6 44.5 46.9 -35.9 6.0 38.8 55.2 -32.8
Q2:2015-16 1304 13.2 38.1 48.7 -24.8 5.2 38.1 56.6 -32.9
Q3:2015-16 1337 12.4 38.7 48.9 -26.4 7.1 35.2 57.7 -28.1
Q4:2015-16 1342 13.3 37.7 49.0 -24.4 6.9 34.2 58.9 -27.3
Q1:2016-17           8.3 36.0 55.7 -27.7
‘Decrease’ in cost of raw material is optimistic.

Table 14: Assessment & Expectation for Selling Price
(Percentage responses)
Quarter Total response Assessment Expectation
Increase Decrease No change Net response Increase Decrease No change Net response
Q4:2014-15 1565 18.1 15.5 66.4 2.6 21.3 8.5 70.2 12.8
Q1:2015-16 1299 18.3 15.2 66.5 3.1 19.1 8.8 72.1 10.3
Q2:2015-16 1304 15.8 19.8 64.4 -4.0 19.5 11.6 68.8 7.9
Q3:2015-16 1337 16.7 18.0 65.3 -1.4 18.3 12.2 69.5 6.2
Q4:2015-16 1342 15.9 19.6 64.5 -3.7 17.9 10.7 71.4 7.2
Q1:2016-17           20.2 13.1 66.7 7.1
‘Increase’ in selling price is optimistic.

Table 15: Assessment & Expectation for Profit Margin
(Percentage responses)
Quarter Total response Assessment Expectation
Increase Decrease No change Net response Increase Decrease No change Net response
Q4:2014-15 1565 15.4 27.9 56.7 -12.5 19.4 20.2 60.4 -0.8
Q1:2015-16 1299 14.2 28.5 57.3 -14.2 18.8 19.3 61.9 -0.5
Q2:2015-16 1304 13.1 30.0 56.9 -16.9 18.5 20.0 61.5 -1.6
Q3:2015-16 1337 14.3 29.5 56.2 -15.3 18.4 19.7 61.9 -1.3
Q4:2015-16 1342 13.4 30.1 56.5 -16.7 18.1 20.1 61.8 -2.0
Q1:2016-17           18.5 22.1 59.4 -3.6
‘Increase’ in profit margin is optimistic.

Table 16: Assessment & Expectation for Overall Business Situation
(Percentage responses)
Quarter Total response Assessment Expectation
Better Worsen No change Net response Better Worsen No change Net response
Q4:2014-15 1565 34.1 12.9 53.0 21.2 43.0 6.9 50.1 36.0
Q1:2015-16 1299 32.5 12.9 54.6 19.6 42.7 6.7 50.6 36.0
Q2:2015-16 1304 30.2 16.3 53.6 13.9 40.3 8.2 51.5 32.0
Q3:2015-16 1337 31.3 14.0 54.7 17.4 39.9 8.3 51.8 31.6
Q4:2015-16 1342 30.8 14.6 54.6 16.2 40.9 7.6 51.5 33.3
Q1:2016-17           39.4 8.9 51.7 30.5
‘Better’ Overall Business Situation is optimistic.

Table 17: Assessment & Expectation for Salary/Other Remuneration
(Percentage responses)
Quarter Total response Assessment Expectation
Increase Decrease No change Net response Increase Decrease No change Net response
Q4:2014-15 1565 28.1 3.6 68.3 24.5 21.5 5.9 72.6 15.6
Q1:2015-16 1299 36.9 2.6 60.5 34.2 27.4 3.9 68.7 23.5
Q2:2015-16 1304 31.7 2.8 65.6 28.9 30.0 2.7 67.3 27.3
Q3:2015-16 1337 28.4 3.2 68.4 25.1 24.3 2.3 73.4 22.0
Q4:2015-16 1342 30.5 3.0 66.5 27.5 25.0 2.8 72.2 22.1
Q1:2016-17           33.2 2.9 63.9 30.3
‘Increase in Salary / other remuneration’ is optimistic.

Table 18: Business Expectation Index (BEI)
Quarter BEI-Assessment Quarter BEI-Expectation Quarter
Q4:2014-15 106.7 115.6
Q1:2015-16 104.8 115.2
Q2:2015-16 102.4 113.1
Q3:2015-16 103.6 113.4
Q4:2015-16 103.0 114.2
Q1:2016-17   110.9

1The 72nd round (Q3:2015-16) survey results were released on January 15, 2016 on the RBI website. The survey results are those of the respondents and are not necessarily shared by the Reserve Bank of India.

2Net Response (NR) is the difference of percentage of the respondents reporting optimism and that reporting pessimism. The range is -100 to 100. Any value greater than zero indicates expansion/optimism and any value less than zero indicates contraction/pessimism i.e., NR = (I – D); where, I is the percentage response of ‘Increase/optimism’, and D is the percentage response of ‘Decrease/pessimism’ and E is the percentage response as ‘no change/Equal’; I+D+E=100. For example, increase in production is optimism whereas decrease in cost of raw material is optimism.

3The Business Expectation Index (BEI) is a composite indicator calculated as weighted (share of GVA of different industry group) net response of nine business indicators. The nine indicators considered for computation of BEI are: (1) overall business situation, (2) production, (3) order books, (4) inventory of raw material, (5) inventory of finished goods, (6) profit margin, (7) employment, (8) exports and (9) capacity utilisation. It gives a single snapshot of business outlook in every quarter. BEI lies between 0 to 200, and 100 is the threshold separating expansion from contraction.


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